How to Lead During a Recession, Part 3: Your Organization
Most of us remember the Great Recession of 2007 – 2009, but your Gen Z (and even some of your Millennial) employees won’t have experienced firsthand this sort of shake-up in the business world. Many Millennials graduated college during the Great Recession, moved back home with their parents and struggled to find work—saddled with college debt. Some of your employees will remember losing their homes and some their businesses. If a recession does hit 2023, the people you lead may struggle with triggering memories from the last recession. And fresh out of a global pandemic, a recession will be another crisis that people will be forced to adapt to and fight through.
As a leader, you have an immense privilege to coach your organization both in and through a recession. You can take preventative measures now to ensure your team is as ready as can be for an economic downturn. In this article, the last in our how to lead during a recession series, we’ll share how you can proactively prepare your organization for a recession and how you can successfully lead through it.
How to Prepare Your Organization for a Recession
“There’s a difference between trying to predict where the economy is going and using real financial results. Said differently, I find that business leaders try and predict where the market/economic indicators are going on behalf of their team. This is a slippery slope because on one hand, part of a leader’s job is to make strategic bets based on where they think ‘the puck is going’ while at the same time, we are shown time and time again that trying to guess where any economic indicator is going to be 6, 12, 18 months from now is often a losing proposition. I’m reminded of a survey done back in 2019 where economists were asked to predict where interest rates would be at the end of the year. None were close. The moral of the story is: I think today’s workforce appreciates transparency and humility and isn’t looking for today’s leader to be a predictor/expert on all things. So what’s the action/takeaway? Be bold and provide guidance on areas where you are the subject matter expert and be humble and understand the areas where you don’t have control—and create that environment in your teams.”
Watch Your Margins. We’ve talked before about how damaging the scarcity mindset can be. Of course, there are times when you need to limit spending and cut budgets, but if you’ve been managing your finances responsibly, don’t let the scarcity mindset creep in. You may very well need to take financial risks for your company to survive a recession—so take the time now to analyze your organization’s budget and keep your eye on the margins. If an economic downturn does hit in 2023, and your margins are padded enough, you’ll be able to afford an abundant mindset instead of a scarcity mindset.
Diversify Your Customer Base. It can be so easy to accept more and more business from one or two large enterprise clients or to have the majority of your customer base from just one industry. The only problem with that is if (or when) things change in that industry—like it can during a recession. If one client makes up a significant portion of your business and that client cuts their spending with you, then you’re in trouble. Or if a specific industry experiences a major downturn and your individual clients stop doing business with you, then your finances will feel the negative impact. Put the work in now to diversify your customer base. Talk with your Sales & Marketing leads and create a strategy to draw in new business from new industries now—before a recession makes it critical.
Optimize Your Processes. A strategic way to prepare your organization for a downturn is to ensure your business is optimized. Pull your Leadership Team together and curiously investigate cross-departmental workflows. Are there any bottlenecks? Process maps and client journey maps are effective tools to help you see clearly. It is crucial to invite feedback from other department leads to determine if there are better ways of doing things or gaps in thinking. As the organization’s leader, you can create an environment where this sort of conversation can be healthy and productive. Help your Leadership Team see that openness and receptivity to other perspectives is key to a growing organization. Make sure people know that their jobs are not on the line if their workflows have unnecessary redundancies, but simply that you want the business to be as efficient as possible and the perspective of the team is vital. Welcome feedback to your own processes and you’ll create a safe and trusted space for your teammates to do the same.
If you take preventative measures now, you can set your organization up as well as possible for an economic downturn. Obviously, there are many factors you can’t control, but it’s important to remember that there are many factors that you can influence. And if you are the leader of an organization, then your influence is widespread and far-reaching.
3 Ways You Can Successfully Lead Your Organization During a Recession
Remain Approachable. A recession brings about uncertainty. And when things are uncertain, people become fearful for their jobs, and stressed because everyone has bills to pay. They’ll be looking to you—their leader—to see how you’re handling everything. Sure, it can feel like a lot of pressure, but it’s also a privilege. You have influence. Don’t lose your authenticity, but don’t give way to fear. Ensure your inner gear is turning smoothly and that your believing and thinking is in a healthy place. Your actions will surely follow. If your organization goes into an office space, then walk the halls and greet people, check-in with them and learn if there is anything they need from you. Grab coffee in the break room and stay five minutes to chat with whoever stops in. If you’re remote, then get creative about check-ins. Visibility fosters approachability. And people need approachable leaders—most especially during uncertain times.
Hold Transparent Conversations. Tell your team what you’re doing. Keep your Leadership Team informed of your preventative measures and rally the team together now to get buy-in from your department leaders. And encourage your department leads to keep their teams up to date on your strategies. Your people are watching the news and the stocks just like you. Communicate with them early and often so that they know you are leading them proactively now and will lead them defensively if needed. There will be times when you will need to hold strategic meetings with your Leadership Team, but don’t hold too many closed door meetings without also communicating out to your organization. It can easy to put your head down and plow through difficult circumstances but you can’t forget to check-in and inform the people doing the work, serving your customers and managing the day-to-day business functions.
Mentor Others. You’ve likely been here before. You survived the Great Recession. So take time to recall your learnings from your experience then and translate to how you show up now. And help others through it too. As a leader, you have influence, so use it to mentor those both within your company and outside of it. Within your organization, you can encourage your Leadership Team to empower their managers to coach their teammates during this uncertain time. Create space for coffee connects on company time. Remember, well-being is vital to self-leadership, and how your teammates lead themselves affects your business. Coffee connects are a strategic business move. And, if you led through the Great Recession, then reach out to younger leaders in your network. Check-in with them and offer to connect. We will get through this recession, but how you lead yourself and show up for others is what they’ll remember.
Hopefully, the economic indicators are wrong and we won’t experience a recession this year or next. But, if one does arrive, we want you to be ready to lead yourself, your team and your organization both in and through this time of uncertainty—just as you’ve done before. We, at Building Champions, have walked alongside thousands of leaders like you over the past 27 years—and we’d love the opportunity to walk with you now. Please reach out; we’re here to help you lead successfully both through and out of a recession.
